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Sales of motorcycles hit new record.

The country's motorcycle industry has recovered fast from the devastating impact of the crisis. In the first 11 months of 2002, sales of motorcycles in the country already reached 2.173,805 units--or already exceeding the 1997's peak of 1,801,066 units. Compared with 2001 sale of 1,650,770 units, the sales in the 11 months of last year were 31.7% higher.

The sales in 2002 exceeded expectation, the Indonesian association of motorcycle (AISIO) said. AISI estimated that sales in 2002 totaled 2.5 million units.

Impressive growth has been recorded since 2000 after a steep fall in 1998 and 1999. The sharp rise in sales is attributed to an increase in the portion of people of middle class in the country at the expense of high income bracket as a result of the financial malaise in 1997 and 1998. Noteworthy also is that mass layoffs contributed to an increase in the sales of motorcycles as many of those losing their jobs bought motorcycles to be used for commercial transport known as "Ojek".

The revival of leasing companies in the automotive sector also contributes to rise in sales of motorcycles Motorcycles, not only popular brands but also Chinese brands and Korean brands are displayed in small and large show rooms in small market.

The sales figure of AISI does not include Chinese products which began to enter the domestic market in big force in 1999. In 1999, imports of Chinese motorcycles reached 200,000. That year products of non AISI grabbed a market share of around 22%, but in 2002, the market share was reduced to only 9% indicating that locally assembled products still are superior in marketing.

The government's decision to raise the price of fuel, electricity and telephone tariffs is feared to change in consumption pattern by giving greater importance to function rather than to convenience in buying a motorcycles. The price will become more important as a factor. Consumer will look for motorcycles within their buying power. In such case suppliers of Chinese products will benefit. Facing such possibility Honda has produce cheap products of cub type using the brand of Legenda. Suzuki followed with Suzuki Smash and Kawasaki with Kawasaki Blits.

AISI said, in 2002, Indonesia was the third largest producer of motorcycles with a production of 2.5 million units. China is the largest producer with an annual production of around 12 million with around 50% of the production exported. The country's production capacity rose with the building of new factories like--PT Kymco Lippo Motor (KLM), which built one at a cost of US$ 50 million. The joint venture company between Lippo and Kwang Yang Motor Co. Ltd (Kymco) produce Jetmatic motorcycles.

--Bosowa which produces Hyosung Taiwan with factory in Karawang using the brand of Bosowa.

--JPT Sanex Motor International, which produces Chinese motorcycle Sanex.

--PT Anglo Sama Permata Motor (ASPM), which built its factory in Sidoarjo with an annual capacity of 350,000 units and with an investment of Rp 200 billion. The new producer uses the brand name of Garuda.

--PT Semesta Citra Motor, which has a factory in Karawang with an annual capacity of 60,000 units using the brand name of Kanzen.

--PT Tossa Sakti in Semarang has an annual capacity of 100,000 units using the brand name of Tossa.

Honda unchallenged

Astra International, the largest automotive company in the country, predicted that its sales of Honda motorcycles will rise 21% to 1.7 million units in the country in 2003. Last year units sales totaled 1.4 million.

The rise in demand has 1 not reduce the intensity of competition especially among suppliers of cub type. Honda contributed 1.37 million to the total sales of 2.173 million in the first 11 months of 2002. The rise in Honda sales was attributable mainly to its Supra-X and Legenda, which is offered a price of Rp 9.7 million. Honda domination is also thanks to its nation wide distribution network.

Suzuki, Yamaha and Kawasaki are not to be left behind in grabbing a larger share of the market. Yamaha came up with its Scorpio, a 225 cc sport type, competing hard against Honda Tiger and Suzuki Thunder. Kawasaki will come up with Ninja KRR a sport type produced in Thailand to meet Honda NSR and Yamaha TZM in competition. Kawasaki has already launched a cheap product of cub type Blitz with a price of Rp 8.92 million.

In addition to Shogun, Suzuki has launched Cool to face Yamaha Tiara and Honda Nova Sonic. Suzuki cheap product Smash is sold at Rp 9.6 million. In the first 11 months of 2002, Suzuki sales totaled 403,560 units second to Honda. Yamaha was third with sales totaling 359,592 and Kawasaki 32,475.

According to data at the industry and trade ministry, there are at least nine Chinese brands imported in built-up form to Indonesia including Xiang Jiang, Zong Sheng, Chunlan, Jianshe, Jin Cheng, Lifan, Hongda, Xin Dong Li, Wang Guan, Dayang, Qingqi, Jialing and Beijing.

Cub market stronger

The cub type, or the unisex motorcycle, remains the favorite. In 2001, sales of the cub type accounted for 89.1%. In the first 11 months of 2002, the market share was 89.6% or 1.947,729 units.

The sport type had the second largest portion of 8.6% in 2001 and 8% in the first 11 months of 2002. The business type accounted for 2% of sales in 2002.

The unisex type dominates the market as it is cheaper in price and more convenient that could be used by both male and female.

Most prepared to meet AFTA

The motorcycle industry is the most prepared to meet AFTA among the country's industrial sectors. Indonesian motorcycles already have high local content. Only a few components like carburetors, clutch, bearing, bolt and transmission components are still imported.

Meanwhile, the domestic market is also potential. According to AISI, the motorcycle people ratio in the country is 1:14. with 15 million units for the population of 210 million.

Motorcycles are locally manufactured although still maintaining the foreign brands. The local content is already 85%. Currently there are 300,000 sub contractors involved in the motorcycle industry in the country including 150,000 units of small industry.

ASI said the use of foreign brand is only part of marketing strategy. For 35 years the local producers have used the brands of their principals. Changing the brand will cost a lot as the Japanese brands have a good reputation in the world in quality.
Table - 1
Sales of local products of motorcycles


Year Sales volume

1997 1,801,066
1998 430,948
1999 487,759
2000 979,422
2001 1,650,770
2002 2,173,805

Source: AI/AISI/Data Consult

Table - 2
Sales of locally produced motorcycles by brands,


Brand 1997 1998 1999

Honda 856,876 264,777 275,195
Suzuki 378,584 84,358 95,143
Yamaha 469,791 70,890 98,434
Kawasaki 80,060 8,315 15,663
Vespa 15,755 2,608 3,324
Total 1,801,066 430,948 487,759

Brand 2000 2001 2002 *)

Honda 489,527 942,003 1,370,000
Suzuki 162,591 299,643 403,506
Yamaha 268,683 335,725 357,592
Kawasaki 52,678 66,709 32,475
Vespa 5,943 6,690 10,232
Total 979,422 1,650,770 2,173,805

Source: AI/AISI/Data Consult

Table - 3
Sales of local products of motorcycles,


 Type 1997 1998 1999

Cub 1,475,547 376,833 423,725
Sport 277,745 45,549 37,757
Business 32,019 5,958 22,953
Scooter 15,755 2,608 3,324
Total 1,801,066 430,948 487,759

 Type 2000 2001 2002 *)

Cub 875,443 1,470,749 1,947,729
Sport 70,518 141,966 173,904
Business 27,518 31,365 43,476
Scooter 5,943 6,690 8,696
Total 979,422 1,650,770 2,173,805

*) January-November

Source: AI/AISI/Data Consult
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Title Annotation:TRADE
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jan 28, 2003
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